Update on the Asia Floor Wage campaign and latest CCC activities

The Clean Clothes Campaign (CCC) has launched a new campaign in Switzerland which basically refers to the Asia Floor Wage campaign and urges companies sourcing in countries like Bangladesh, China and India to pay higher prices for the goods in order to enable workers to receive a living wage. It could be that branches of other European countries’ CCC branches address this topic as well again in the near future. The timing seems not to be a coincidence – just a few days ago, the government of Bangladesh fixed a new statutory minimum wage for the textile industry. Background information The new statutory minimum wage for the textile industry in Bangladesh has been set at 3.000 Taka (32€) and is to be implemented as of November 1st ; previously, the statutory minimum wage was 1.980 Taka (22€). During the negotiations, trade unions had called for setting the wage at 5.000 Taka (54€). The Asia Floor Wage campaign advocates the payment of a living wage in Bangladesh amounting to 10.000 Taka (108€). The Clean Clothes Campaign critizises the new wage fixed in Bangladesh referring to their claim for living wages and the Asia Floor Wage. On 9 August, a Round Table will be held in Dhaka, aiming at the topic of individual responsibilities of stakeholders. Our BSCI representative in India, Mr Dietrich Kebschull, will participate in the meeting. In this context, it has to be seen what the stakeholders will propose with regard to the continuous unrest in the country. At the end of 2009 and in 2010, we had several discussions with our members and stakeholders – government, business, trade unions and NGO representatives. The topic of wages has been put on the agenda of Round Tables of stakeholders in Bangladesh (3 March), India (18 March), China (23 March) and Turkey (17 June). It has also been discussed in our Stakeholder Board and in the German Round Table for Codes of Conduct (19 May). BSCI’s stance towards the AFW and the related CCC campaign The AFW campaign raises the important and complex issue of wages that is addressed by the BSCI Code of Conduct. The BSCI Code stipulates that supplier companies shall pay the minimum “legal wage”, which in many developing countries is already a challenge! However, in the framework of BSCI’s development approach, the BSCI also encourages supplier companies to provide their employees with a living wage. In this connection, BSCI provides a position paper elaborating this approach in more detail. The AFW follows a laudable aim and the proposed calculation is a good starting point for discussions but it fails to explain how to implement it in practice and how to tackle a couple of key challenges: - The implementation of a floor wage as proposed by AFW would be a major problem for keeping companies’ competitiveness – either for the factory, or the retailers, or even countries compared with others. This is notably true for Bangladesh which is competing for orders with China, Vietnam and India and where the garment industry stands for 75% of the country’s export, employing 2,5 million workers in more than 5000 factories. If factories would pay a living wage, products would become more costly. How can it be ensured that the factory, the sector or even the supplier country as a whole doesn’t lose its competitiveness? The AFW doesn’t provide an answer to this important point. - If buyers would pay more for the products, how would it be ensured that the workers really get a higher pay? Neither the AFW nor CCC provide input on this question, and the point is not raised. - The calculation of prices of products is highly complex and varies depending on individual parameters of supply chains. This means that reality is not as simple that if buyers paid a certain amount more for a product, this would ensure a living wage for workers. CCC campaigns, and again the one which has just started in Switzerland ignores this important matter and creates a simplified and incorrect picture for consumers. In this context, the topic of living wages should not be a campaigning issue against companies but should rather be addressed at the company level through a strong CSR-program such as the BSCI and at the political level by raising it with EU institutions, the UN and ILO, G20, ASEAN and national governments. Impact on BSCI audits The raise of the minimum wage in Bangladesh will be implemented as of November 1st. With regard to BSCI auditing approach, please be aware that: • Audits done before the date of change have to show compliance with the old minimum wage and the audits performed afterwards will have to show compliant with the new wages. This means that factories which have received a “good” audit result before the new wage was decided, remain compliant. Only during the next (initial) audit it has to be seen if they comply to the new law. • Initial and re-audits (if the compensation was a matter of re-auditing) conducted after entering into force of the new wage will have to respect the new law. Read our position paper: http://www.bsci-eu.org/dl.php?id=10517 For more information, contact: Lorenz Berzau or Stéphanie Luong.

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